Customs, Excise and Gold Tribunal - Mumbai
Collector Of Central Excise vs Rawji Ind. Corpn. on 7 February, 1994
Equivalent citations: 1994(53)ECR245(TRI.-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. This is an appeal from the Revenue against the order in appeal No. M-1268/B1-359/85 dt. 1.8.1985, allowing the appeal of the respondents on the ground that the show cause notice for recovery of erroneous refund was issued beyond a period of six months.
2. The facts of the case for purposes of disposal of this appeal are as below:
There was a dispute with regard to classification of fibre glass reinforced corrugated roofing and its eligibility for exemption under Notification 68/71-C.... Ex. The Assistant Collector passed an order dated 30.10.1994 classifying it under Tariff Item 15A(2) but rejecting the respondent's claim for exemption under Notification No. 68/71. When the matter was taken up before Collector (Appeals), he, in his order dated 11.6.1975, allowed the appeal of the respondents. Consequently a sum of Rs. 68,966/- paid as duty by the Respondents was sanctioned refund and a cheque was issued on 7.8.1975. However the order of the Collector (Appeals) was reviewed by the Govt. of India Ministry of Finance in exercise of the powers vested in them under the erstwhile Section 36 of the Central Excises & Salt Act and a notice dt. 21.5.1976 was issued in that regard under Section 36(2) of the said Act. The Assistant Collector also is reported to have given a letter dt. 31.1.1976 to the respondents that refund has been erroneously sanctioned and is liable to be recovered in the event of the Govt. of India deciding the case against the respondents. [This letter No. (illegible)(16) 18-29/79/2054 dt. 31.1.1976 is referred to by the Assistant Collector in the order confirming the demand]. The Govt. of India, in the review proceedings initiated against the respondents, finally passed the order on 29.8.1977, setting aside the order of the Collector (Appeals) and thereby denying the exemption. Thereupon a SCN was issued by the Assistant Collector on 5.1.1978 and in the order passed on 9.12.1981 by the Assistant Collector, he held that the amount of Rs. 68,966.56 is recoverable and ordered recovery of the said amount, by confirming the demand. On an appeal by the respondents before the Collector (Appeals) it was argued by the respondents that refund was granted by issue of cheque dt. 7.8.1975, the review order was passed by the Govt. of India on 29.8.1977 and the SCN was issued on 5.1.1978. Since the refund has been sanctioned as per the valid orders of the Appellate Collector, show cause notice should have been issued within six months from the date of refund. Hence they pleaded for setting aside the demand only on the ground of time bar. This plea has been accepted by the Collector (Appeals) in the impugned order dt. 1.8.1985. This finding of the Collector (Appeals) is now challenged before me in the present appeal.
3. Heard the arguments from both the sides. The above facts are not disputed. The main thrust of the arguments of Shri D.H. Shah on behalf of the respondents are as below:
3.1. The show cause notice issued by the G.O.I is not for recovery of erroneous refund and when they issued the show cause notice on 21.5.1976, refund cheque has already been issued on (illegible) 7.8.1975. Hence the subject matter of the review proceedings was only with regard to the decision of the Collector (Appeals) dt. 11.6.1975 allowing the benefit of exemption under Notification No. 68/71 and cannot extend to recovery of refund already sanctioned.
3.2. The letter from the Assistant Collector dt. 31.1.1976 cannot be construed to be a notice required to be issued under Rule 10 or Section 11A.
3.3. Such a notice was issued on 5.1.1978, beyond the period of six months from the date of refund.
3.4. This Bench as well as other Benches have taken the view that for recovery of erroneous refund, SCN under Section 11A is a must, irrespective of any appeal having been filed against the order of refund. In this context, he cited the following decisions:
(i) Collector of Central Excise v. Universal Radiators-
(ii) Re-Rolling Mills v. Collector of Central Excise 3.5. He, however, fairly agrees that in the case of Andra (sic) Sugars , the Tribunal has taken a contrary view that where an appeal has been filed by the revenue within the time limit prescribed under Section 35(A) of the Central Excise Act, the notice under Section 11A is not applicable. But he pleads that in that decision, the earlier decision of the Tribunal referred to by him have not been considered. Even the West Regional Bench have taken the view favourable to the assessee on this point, but later they have allowed Reference Application as is evident from the Bench's order No. 1246/93-WRB dt. 7.7.1993 in the Reference Application filed by Collector, Ahmedabad v. Reford Oil Refineries. He would therefore plead that in case the Bench is not inclined to go by the previous decisions, the matter may be referred to the larger Bench.
4. For the sake of brevity and in view of the order proposed to be passed, I am not recording the arguments of Shri Mondal in detail. The same will be referred to wherever necessary.
5. None of the arguments from Shri D.H. Shah appeals to me for the following reasons.
(i) In this case, the proceedings initiated by the G.O.I. are in the context of the erstwhile Section 36 of the Central Excise Act, whereunder the Govt. can call for the records or otherwise and on review of the orders passed by Collectors issues the SCN to the affected parties and after due process of adjudication, decides on the issue sought to be reviewed. In Section 36, there are no mandatory Requirements for issue of SCN for recovery of erroneous refund or short levy within time limits laid down under Section HA, as is found in Section 35A of the Central Excise Act. Hence the case laws cited by the Id. advocate with reference to the provisions of Section 35A vis-a-vis Section 11A have no relevance and applying any of them in this case for making a reference to the larger Bench because of the divergent views, does not arise. This appeal is to be independently considered in the context of the provisions of Section 36, as it stood then for considering whether a SCN under Rule 10 or Section 11A is also recovered to be issued, apart from the notice issued by the Govt. of India in exercise of the powers vested in them under Section 35 (Illegible)(a) of the Central Excise Act.
(ii) In this case, admittedly a notice has been issued under Section 36(2) within the time limits prescribed in the statute,. As pleaded by Mr. Mondal, strictly speaking no further notice under Rule 10 may be called for, in the absence of any statutory requirement under Section 36. Because, refund granted is a consequential one arising out of the order-in-appeal passed by the Collector (Appeals) allowing the exemption. The Assistant Collector has to comply with that order. He does not have powers to refuse it. Hence he has issued the cheque for refund consequent on the order of Collector (Appeals) dt. 11.6.1975. But, when the GOI initiated review proceedings on the order of the Collector (Appeals), the Assistant Collector has taken steps to bring it to the notice of the respondents that refund sanctioned is liable to be recovered depending on the outcome of the decision of the GOI and the letter issued by the Assistant Collector is even otherwise well within the time limit under Rule 10. The Assistant Collector at that time could not have issued a notice for recovery of the refund, on account of the fact that cause of action has not yet arisen and the order of the Collector (Appeals) which was under review by the G.O.I, was not then set aside. Hence if a SCN has been issued by the Assistant Collector after the review order passed by the GOI setting aside the order of the Collector (Appeals), it can only be construed as a requirement for complying with principles of natural justice before ordering recovery and cannot be said to be hit by limitation under Rule 10 or Section 11A.
(iii) I am also unable to agree with the contention of Shri D.H. Shah, that since review notice issued under Section 36(2) by the G.O.I. does not propose recovery of refund (though refund has been sanctioned before the issue of the notice), recovery of refund can be effected only by a proper SCN issued under Rule 10; because, as per the provisions of Section 36, the Govt. has powers to review only the orders passed by the Collector or the Board and not an order passed by the Assistant Collector. When it is not disputed that order of refund is a consequence of the order of the Collector (Appeals), the review SCN on the order of the Collector (Appeals) automatically covers the consequential benefit, which has arisen out of the order of the Collector (Appeals) and Govt. need not have to propose separately recovery of refund in that notice.
(iv) This aspect of the work has however been done by the Assistant Collector, who sanctioned the refund, by writing a letter to the respondents pointing out that refund sanctioned is liable to be recovered depending on the outcome of the decision of the GOI in the review proceedings.
6. I am therefore of the view that the Collector (Appeals) in the impugned order dated 1.8.1985 has failed to appreciate the above position and has therefore wrongly allowed the appeal of the respondents on the ground of time bar of the demand. In the result, the appeal from the revenue is allowed and the order dt. 1.8.1985 passed by the Collector (Appeals) is set aside.